Money & Banking. What is money…  Medium of Exchange  It is accepted in buying and selling goods and services.  Easier than barter  Store of value.

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Presentation on theme: "Money & Banking. What is money…  Medium of Exchange  It is accepted in buying and selling goods and services.  Easier than barter  Store of value."— Presentation transcript:

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Money & Banking

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What is money…  Medium of Exchange  It is accepted in buying and selling goods and services.  Easier than barter  Store of value  It can be set aside for the future and still have value  Measure of Value  How much is something worth? Allows for easy comparison. A$500 laptop computer is worth more than a $100 printer

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Characteristics of Money  Durability – won’t wear out or break  Portability – easy to carry or move  Divisibility – can divide in to practical sizes  Uniform- each unit is exactly the same (is a new pencil the same as a used pencil?)  Limited Supply/Hard to Counterfeit- the law of supply and demand – if anyone can get it, it has no value.  Acceptability- sellers agree to accept it in exchange for their product.

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How does money get its value?  Commodity – has value in and of itself  Wheat – I can use it to make bread or trade it to someone else who wants to make bread.  Specie – Coins made of silver and gold or IOUs that can be traded for silver and gold  Fiat – legal tender – government orders or decrees that the money has value

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Your Turn  Evaluate a commodity as a form of money…

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Where to keep the money safe??? Bank vs Credit Union A Bank is a for profit company that makes money from charging fees and lending money to its customers. Banks pay taxes. Advantages - more locations, more financial products. A Credit Union is a non-profit cooperative owned and controlled by its members. It serves groups that have something in common, profession, neighborhood… Advantages – lower fees and better interest rates.

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How do banks make $$$$  Fees charged for service  Loans to its customers  House  Mortgage  Home equity  Car/boat  Credit Cards